USD weakness persists as risk appetite returns amid fading tensions

The US dollar index extended losses into Tuesday's session following Monday's sharp decline, with major currencies holding gains as geopolitical tensions ease. The dollar's retreat helped push risk assets higher, with the S&P 500 now trading within 0.9% of its all-time high, reflecting improved market sentiment. EUR/USD maintained its advance near 1.0580, while GBP/USD held steady around 1.2650. The shift in risk appetite has reduced demand for safe-haven dollars, with traders reassessing positions ahead of this week's limited economic calendar. Technical indicators suggest the dollar index faces immediate support at 104.20, with resistance emerging at 104.80. The lack of major economic releases today could lead to consolidation, though sustained risk-on sentiment may continue pressuring the greenback. Traders are monitoring whether Monday's dollar selloff represents a broader trend reversal or temporary correction.